Navigating Global Expansion: An Insider s Guide

Transcription

1 ` Essential Knowledge Navigating Global Expansion: An Insider s Guide VISION Relocation Group Vol. 6, No. 2

2 Navigating Global Expansion: An Insider s Guide Is your team ready to perform in an increasingly competitive global market? If so, do you have a robust relocation program ready to support the assignment and projection of your team s talent across the world, in an efficient, cost-effective manner? U.S. companies looking for ways to better navigate global expansion are finding that surviving and prospering in new territories can pose many challenges, especially the intricacies of relocating critical personnel and their families. A recent global mobility survey conducted by Deloitte notes that the readiness of human capital will be the most important factor in being prepared to move quickly on new business opportunities. Businesses that are prepared with strategic expansion plans and staffing approaches are the most likely to succeed. Yet, only 34% of companies surveyed feel their senior management fully understands the important role of global mobility readiness, and more than 40% feel their mobility programs need significant to radical improvement. The disconnect is evident, and as global business opportunities continue to rise as expected in the next three to five years, there is a critical need for staffing and business alignment. The best way to achieve this is by conducting in-depth market research to prepare and anticipate business opportunities and help navigate new territories. Acknowledging the need for formal written plans that outline immigration and business startup requirements and talent assessment will ensure readiness for quick establishment and growth of a new location. Companies can no longer be reactive to opportunity, but rather proactively seek out opportunities to achieve successful business expansion. This is the perfect time to engage Human Resources to develop programs that are cost effective, but allow the assignee to feel the full support of the company. Some surprising statistics were shared by Worldwide Employee Relocation Council CEO/ President, Peggy Smith, recently at the Delaware Valley Relocation Council from the Manpower 2012 Talent Shortage survey. Despite all the talk of unemployment, 49% of United States, 71% of Brazilian, and 81% of Japanese companies say they are having difficulty filling jobs. This is largely due to lack of quality candidates, who aren t equipped with the skills needed in science, technology, engineering, and/or mathematics. Early in the planning for global expansion, it is important for Human Resources to identify staff needs and gaps through coordinated internal planning, as well as implement training and development plans. During the planning stage, businesses can develop global policies at various tiers for long- and short-term; keeping cost top of mind, but robust enough to attract the right candidate to a new, exciting adventure. Policy development starts by determining the company s corporate philosophy on global assignments. Then formal documentation of programs early in the process gives the business leaders the ability to understand the costs for this important part of the overall expansion expenditures. Early planning also allows for researching and, if required, contracting with external service providers to facilitate key services such as:

3 Visa and immigration requirements Health care benefits Compensation analysis Cost of living analysis Tax equalization options Global third party company for relocation policy administration Understanding these processes, costs, and timelines is an integral part of a business startup plan in a new location. Additional steps would be to determine how life insurance, retirement tracking, and emergency leave will work and where payroll will be handled for the assignees, either in the home or host country. Involving all the stakeholders in the organization responsible for managing these services ensures no key details are missed and clarity of these benefits. It is important that this all be defined and documented early as the first assignees tend to be the startup management or the Tier 1 group. This group needs a clear understanding of the base program to understand what other benefits they may require to assume an assignment. Any additional benefits negotiated can be documented in a supplemental detailed assignment letter of terms and agreements which can also include the payback agreement. An assignment letter would include elements such as the position effective date, role description, salary, assignment bonus, length of assignment, and exceptions to the base program host country housing allowances, children schooling, club memberships, current home arrangements, cost of living differential, settling in allowance, transportation allowance, etc. A common mistake companies make during a start up at a new location is to create a custom policy for each initial assignee. Doing this makes it difficult to determine base program costs for assignments, which is an important part of analyzing the overall costs of a new business endeavor. Also be assured, future long-term assignees will learn the details and expect highly customized programs be negotiated. Creating a Tier l long-term global relocation policy: This level of program covers the critical senior and line management responsible for the new location. Once key internal services noted above are determined and any needed outsourced providers are in place, here are the core relocation benefits to consider for 18 to 48-month assignments. Preview trips: Typically seven days for the potential assignee and spouse, if applicable, should be provided so they can determine if this location works for them for a long-term assignment. On this trip, most companies arrange through their third party partners, a Destination Service Provider (DSP) guided area tour, preview of housing and school tours, if applicable. Having a preview of the culture and lifestyle of the host company is an important part of a successful long-term assignment. Current home: If the employee will be returning to current office location, companies typically offer a Property Management service for renting out the home during the assignment. The employee would be authorized to their third party partner to explain and coordinate the leasing, maintenance and financial transaction for the assignee. For longer term

4 assignments, the domestic home sale program may be offered to the employee. For those leasing in departure location, lease-breaking fees should be provided for up to three months. En-route travel expenses to and from home country: Most companies follow their business travel policy for this trip and require use of the company travel firm. Actual en-route expenses for items such as taxis, food, hotels should be submitted for reimbursement to the third party partner. Temporary housing in host country: It is typical for companies to provide short-term furnished housing and meals at the host location until the household goods arrive. Many firms set a per diem based on the location paid by the third party partner during the temporary housing period. This partner can also make arrangements and, in many cases, arrange a direct billing of the short-term housing costs for the assignee. Host Country Housing: Unfurnished apartments or houses including utilities are common. Cable and phone charges are typically at the assignees cost. The services of the DSP who provided the pre-decision tour can be arranged by the third party partner to assist with acquiring housing and lease negotiations. It is highly suggested that at least two additional days of settling in services be provided to the family i.e. area orientation for shopping, banking, school tours, etc. Direct rent payment or reimbursement to the assignee of these costs can be handled by the third party partner depending on local customs. Dependent Education: Cost for eligible dependents residing with assignee from Kindergarten through High School should have their expenses reimbursed. In many locations, private schools may be the only option for the dependents. The DSP arranged by the third party partner can handle school tour set ups, review of documents required, etc. School payments can be handled by the third party provider in many countries or reimbursed to the assignee. Dependent Visits: Dependent children not living with assignee should be allowed an annual visit and business travel policy should be followed. Home Leave: Every twelve (12) months home leave for assignee and family should be covered and be considered part of the assignee s vacation accrual. In hardship areas, more frequent leave could be authorized. Business travel policy should apply and reimbursement for these trips can be handled by the third party provider. Relocation Allowance for Move to/from Host Country: At this tier, it is typical for one month s salary to be provided at commencement of the assignment and again when repatriating home. This covers miscellaneous items that may not be in the policy. There is no accounting of how the assignee spends these funds. This can be paid through payroll or by the third party provider

5 Household Goods Shipments: Most firms will ship household goods up to one 40 ft. container and allow for 500 lbs. of air shipment for items needed more rapidly. Storage of items in the departure location that are not shipped is typically allowed for the tenure of the assignment. The third party partner can make these arrangements. Shipment of Pets: More and more companies are assisting assignees with the shipment of pets. This can be coordinated by their third party partner who will arrange for a professional pet shipping service to handle. Expenses for vaccinations, quarantine costs, etc. should be at the assignees expense. Host Country Transportation: Most companies will provide leased cars for the assignment, or in some locations, car services may need to be needed. If the company needs assistance in arranging for leases, the local DSP can assist. Costs for gasoline should be at the assignees expense. Cultural and Language Training: Even if the host country speaks English, it is suggested that cultural training be provided. There are many nuances to speaking and living in another country. It would be important for a successful assignment to provide the cultural training to the assignee and the family. If English is not spoken, language training should be made available for the entire family. This is important for social needs and in business dealings for the assignees, supporting a successful assignment experience. The third party partner can arrange for these services at the departure location prior to the move. Creating a-short-term global assignment policy: This level of program covers staff with specialized skills needed as locations begin to mature and services may be required for six to 18 months on the assignment. The typical core benefits include: Current Home: Most policies do not include a Property Management or Home Sale element in these assignments. Managing the former home is usually at assignees cost and discretion. Some companies will pay lease breaking expenses for renters up to three months. En-route travel expenses to and from home country: Most companies follow their business travel policy for the trip and require use of the company travel firm. Actual en-route expenses for items such as taxis, food, hotels should be submitted for reimbursement to the third party partner. Temporary housing in host country: Companies usually provide short term furnished housing and meals at the host location if the permanent furnished housing is not available upon arrival or hotel accommodations if shorter than one month is needed. Many firms set a per diem based on

6 the location paid by the third party partner during this temporary housing period. This partner can also make arrangements and, in many cases, arrange a direct billing of the short term housing costs for the assignee. Host Country Housing: Fully furnished housing including utilities is typical for this type of assignment. Cable, if not included in unit cost, and phone charges are at the assignees cost. The services of the DSP can be arranged by the third party partner to assist with acquiring housing and lease negotiations. It is highly suggested that at least two additional days of settling in services be provided to the assignee and or family i.e. area orientation for shopping, banking, school tours, etc. Direct rent payment or reimbursement to the assignee of these costs can be handled by the third party partner depending on the host location. Dependent education: If the family will be accompanying the assignee, cost for eligible dependents from Kindergarten through High School should have their expenses reimbursed. In many locations, private schools may be the only option for the dependents. The DSP arranged by the third party partner can handle school tour set ups, review of documents required, etc. School payments can be handled by the third party provider or reimbursed to the assignee. Dependent visits: Dependent children not living with assignee should be allowed an annual visit and business travel policy should be followed. Host country transportation: Most companies will provide leased cars for the assignment, or in some locations, car services may need to be needed. If the company needs assistance in arranging for leases, the DSP assigned can assist. Costs for gasoline should be at the assignees expense. Household goods shipments: Most firms will allow for 500 lbs. of personal items to be shipped since the program is intended to include fully furnished host area housing. Relocation Allowance: The majority of companies do not pay an allowance on short term assignments. Home leave: Every 12 months home leave for assignee and family should be covered and be considered part of the assignee s vacation accrual. In hardship areas, more frequent leave could be authorized. Business travel policy should apply and reimbursement for these trips can be handled by the third party provider. Shipment of Pets: This is typically on a case by case basis on a short term assignment. If approved, assistance can be coordinated by their third party partner who will arrange for a professional pet shipping service to handle. Expenses for vaccinations, quarantine costs, etc. should be at the assignees expense

7 Cultural and language training: Even if the host country speaks English, it is suggested that cultural training be provided for assignments. There are many nuances to speaking and living in another country, even on a short term assignment. It would be important for a successful assignment to provide the cultural training to the assignee and the family. If English is not spoken, language training should be made available for the entire family accompanying the assignee. This helps in social situations for the family and in business dealings for the assignees. The third party partner can arrange for these services at the departure location prior to the move. Creating a global business assignment policy: As with domestic short term business needs, global assignments may require an employee to come to a global location to do project work or train locals on a specific task. These assignments are usually three (3) but no more than six (6) months in duration. Families are not included in the benefit package. Current Home: There are typically no benefits covering departure location housing. Home leave: No return home trips, except for emergencies, are typical during these assignments. En-route travel expenses to and from home country: Most companies follow their business travel policy for the trip and require use of the company travel firm. Actual en-route expenses for items such as taxis, food, hotels should be submitted for reimbursement to the third party partner. Household goods shipments: Only extra weight airline luggage costs are typically covered for these assignments. Host country transportation: Most companies will allow a rental car for the assignment, or in some locations, car services may need to be needed. Costs for gasoline should be at the assignees expense. Host Country Housing: Fully furnished one bedroom apartment including all utilities is typical for this type of assignment. Phone charges are at the assignees cost. Cultural and language training: Even if the host country speaks English, it is suggested that business cultural training be provided for assignment. Language training should be provided to non-english speaking locations. The third party partner can arrange for these services at the departure location prior to the move. Global relocation policies should support the business and the assignee with high quality service that is cost effective, consistent and easy to administer. The most successful

8 companies link business expansion and overall business strategy directly to their staffing approach. The recommendations in this white paper are based on publicly available industry research as well as the knowledge and experiences of our VISION Relocation Consulting Services Division, with over 5 decades of relocation experience. Our insights are supported by our recent client survey asking organizations about their use of formal global policies. In our most recent research, 78% of companies responding to VISION s survey reported they use formal written policies for their global moves. Early planning and having established resources and policies for the assignees in advance ensure productive and successful assignments, thereby increasing assignment success and your ROI. In every client relationship, VISION brings these insights and our collective experience to bear to deliver creative, high-quality relocation programs whether your team has 20, 200 or even more yearly relocations. We reduce hassle and your personal time commitment so you can focus on your business strategy, while we handle the rest. Contact us to speak to one of our experts and learn how you can optimize your relocation program, maximize your yearly relocation spend and drive your business goals forward. Resources: Deloitte, Strategic Moves: A New Direction for Global Mobility, 2012 Global Survey Manpower Group, 2012 Talent Shortage Survey VISION Relocation Group, Essential Knowledge: One Minute Survey Says April 2013 About VISION Relocation Group VISION is a full service global relocation management and consulting company that has been providing government, corporate and non-profit clients with innovative and service-driven relocation experiences for more than 26 years. Our team provides a personalized, consultative approach to your relocation benefits program that makes us more than just a Service Provider, but a dedicated steward of your most precious assets your employees and your bottom line. Although you will enjoy the cost-savings and efficiencies of outsourced relocation management, we guarantee service that feels in-house, and a team whose success begins with yours. At VISION, we believe it s critical to push and pull at old limitations and preconceived notions to develop creative solutions to our clients global relocation challenges. We call it Relocation Imagination, and we look forward to sharing the benefits of our years of experience with your team. Contact us at [email protected]